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Indonesian’s construction sector grew 7.2% last year and according to Business Monitor International is expected to keep the pace in 2013.
In this article we look at the ownership restrictions and construction service business license required for the foreign owned companies
Construction business foreign ownership restrictions
According to the Negative Investment List, majority of construction businesses are limited to maximum 67% foreign ownership and are required to engage a local partner.
67% limitation applies to companies handling projects worth over 1 billion Rupiah (~100,000 USD) and using advanced technology or having high risk conditions.
There are many sectors however where the foreign ownership is limited to 55%:
- Construction consulting
- Design service and architecture consultants
- Engineering services
Make sure to check the Negative Investment List as your particular service might have a different restriction.
Construction Service Business License (IUJK)
Choosing categories and sub categories
Once your company is incorporated in Indonesia,you will need to obtain Construction Service Business License (IUJK). This is required for any business involved in construction and also a condition for joining tenders.
In order to get IUJK, you will need to choose your classification and sub-classification. One company can choose maximum 2 classifications out of the following list:
- Architecture
- Civil works
- Mechanical
- Planology
Each category has a list of sub-categories. Regardless of whether you choose one or two categories, you are limited to maximum 4 sub-categories. In case you are not completely sure about your upcoming activities (even though rare among construction companies), it is advised to use all your 4 sub-category slots because adding them later will be more complicated.
(Emerhub’s Note: we offer company registration service. Check out our company registration page.)
ISO certificate and Quality Management Manual
Second condition for receiving IUJK is ISO 9001:2008 and Quality Management Manual. Both of those need to be issued in Indonesia.
At least 2 experts
Every construction company is required to have at least two experts with qualification in the same area as your IUJK’s categories. Those experts will then we issued a certificate called SKA.
Often foreign companies struggle to find such experts in Indonesia. That’s where having an established agent, such as ourselves, comes handy. We are able to find the experts without you having to hire them. It will cut the registration time and cost immensely.
Construction Association Registry (KTA) and Legal Entity Certificate (SBU)
Last documents before getting your IUJK will be KTA and SBU. KTA is a proof of membership at the Construction Association Registry and SBU is the certificate of your legal entity.
Timeline
Total process of getting all the documents ready and processed takes about 45 working days. Using an agent is strongly advised unless you are very familiar with the Indonesian law and can go through the red tape comfortably. In case you are a construction company looking to receive IUJK, email us at [email protected]
